Are Female Entrepreneurs Segregated?

By Christopher Shea

Cities are founts of entrepreneurial activity partly because ambitious people working alongside one another become more creative, but a new study suggests that women are often cut off from such connections—that female entrepreneurs are segregated.

Using market research from Dun & Bradstreet, the authors looked at the distribution of female-owned businesses in 35 industries in Metropolitan Statistical Areas with at least (roughly) 100,000 people. They compared the locations of those businesses with those of enterprises not owned by women. Female owned companies, they found, were less likely to be in business-dense regions (the measure used: how many jobs of all kinds are located within one mile of the business?); female-owned companies were less likely to be near similar businesses (how many jobs in that industry within one mile?); and they were less likely to be near financial institutions, which often have close relationships with entrepreneurs.

In the category of “finance, insurance, and real estate,” for example, women-owned businesss had 24% less exposure to other businesses, in general, 29% less exposure to similar companies, and 28% less exposure to banks. Similar levels of segregation—if not always quite that high— were evident in most business categories. (Service-related businesses appeared to be the least segregated.)

Citing Census data on male and female commutes to work, the authors partly attributed these disadvantageous geographic patterns to female entrepreneurs’ desire to live closer to their businesses, perhaps because they do the lion’s share of the work at home.

To put the “spatial mismatch” into context, the authors used a measure sometimes used to study black-white housing segregation: How many female-owned businesses would have to move to a different census tract in order for them to have the same geographic relationship with other enterprises?In many industry subcategories, the figure was in the neighborhood of 50%. “The magnitude approaches and sometimes exceeds the level of segregation experienced by African-American households in housing markets,” the authors write.

Stuart S. Rosenthal, a professor of economics at Syracuse University and a co-author of the study, explaining why this important issue has been overlooked. “We see residential segregation based on observable demographic attributes,” he says, “but we basically have no idea who owns the businesses we walk past.”